• Net Interest Income: $43.4 million in Q4, a 7.6% increase from Q3 and a 16.4% increase from the previous year.
• Loan Growth: $76.6 million increase in Q4 (2% growth); $327.6 million increase for the full year (9% growth).
• Deposit Growth: $316 million increase in Q4 (7.9% growth); $507.4 million increase for the full year (13.3% growth).
• Efficiency Ratio: Improved to 58.8% in Q4, below the target of 60%.
• Net Income: $47.7 million for 2024, a 42.7% increase from the previous year.
• Earnings Per Share: $3.14 basic and $2.78 diluted for 2024.
• Non-Performing Loans Ratio: Increased to 0.7% in Q4 from 0.62% in Q3.
• Net Charge Offs: $879,000 in Q4, or 0.09% of average loans.
• Investment Securities Growth: Increased by $91.9 million in Q4.
• Yield on Securities: 5.44% on purchased securities; 6.31% on total portfolio at period end.

• Warning! GuruFocus has detected 3 Warning Sign with TCBX.

Release Date: January 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Third Coast Bancshares Inc (NASDAQ:TCBX) achieved 14 consecutive quarters of net interest income growth, with a 7.6% increase in the fourth quarter.
• Loan growth was strong, with a 2% increase in the fourth quarter and a 9% increase for the full year.
• Deposits grew significantly, with a 7.9% increase in the fourth quarter and a 13.3% increase for the full year.
• The company improved its efficiency ratio to 58.8%, surpassing its target of below 60%.
• Net income for 2024 reached $47.7 million, marking a 42.7% increase from the previous year.

Negative Points

• Non-performing loans to total loans ratio increased to 0.7% in the fourth quarter from 0.62% in the third quarter.
• There was a $690,000 charge-off related to loans placed on nonaccrual during the quarter.
• Other noninterest expenses rose in the fourth quarter due to increased salary and bonus expenses.
• The net interest margin was slightly impacted by a large increase in low-margin cash balances.
• The company anticipates a typical seasonal dip in deposits in the first quarter of 2025.

Q & A Highlights

Q: Could you discuss the fourth quarter loan yield and any expectations going forward? A: R. John Mcwhorter, CFO: We outperformed on both loan yields and cost of funds, despite being very rate sensitive. New loans have been at better spreads, which made up the difference. We are happy with the results and expect similar performance, though it's hard to predict exact volumes.

Q: Are you seeing loan competition impacting spreads on new loan production? A: Bart Caraway, CEO: We have strong bankers and a solid pipeline, but remain selective. We aim for a spread of SOFR plus 300 basis points and will turn away deals that don't meet our pricing targets. The market is competitive, but we are ahead due to our pipeline.

Q: What are your expectations for the net interest margin in the coming quarters? A: R. John Mcwhorter, CFO: The margin would have been 5-7 basis points higher without excess cash in Q4. We expect the margin to be higher going forward, depending on cash balances. Our goal is a loan-to-deposit ratio of 95-96%, which should support a stable margin.

Q: How should we think about expense growth in 2025? A: R. John Mcwhorter, CFO: We expect expenses to grow about 4% year-over-year. Recent hires have increased expenses, but we anticipate benefits from technology changes in the latter half of the year.

Q: Can you provide more details on the tech improvements scheduled for the second half of the year? A: Bart Caraway, CEO: We are switching from Jack Henry to FIS, which will save money and offer more functionality. This change will enhance deposit-taking capabilities and improve treasury products, leading to potential savings and increased productivity.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.